Monster Beverage Corporation (MNST) shares were up 3% in the pre-market before moving modestly lower during the morning hours of Thursday's session. Bank of America resumed coverage of the energy drink maker with a Buy rating and a $70 price target. Analyst Peter Galbo believes that the company will continue to grow faster than its peers as it works with its strategic partner, The Coca-Cola Company (KO), to drive global growth in the category.
Earlier this month, Goldman Sachs resumed its coverage of the stock with a Buy rating and a $65 price target. Analyst Bonnie Herzog said that the energy drink category would likely be resilient in the current environment given strong customer loyalty and low household penetration.
In March, Monster Beverage also authorized a new $500 million share repurchase program, extending its existing share repurchase program that had $536.6 million remaining as of March 11, 2020. These repurchases could help support the stock price during any COVID-19-driven declines.
From a technical standpoint, the stock moved sharply higher during Tuesday's session before trending sideways over the past two sessions. The relative strength index (RSI) remains neutral with a reading of 54.62, but the moving average convergence divergence (MACD) remains in a bullish uptrend. These indicators suggest that the stock has more room to run.
Traders should watch for consolidation above the 50- and 200-day moving averages before Monster Beverage stock mounts another move higher to retest reaction highs of $68.00 and $70.00. If the stock breaks down, traders could see a move toward reaction highs of $58.00 or a retest of lows near $50.00, although that scenario appears less likely to occur given the bullish backdrop.
The author holds no position in the stock(s) mentioned except through passively managed index funds.